The Government is proposing a new piracy framework that could require ISPs to block access to overseas websites and hold them more accountable for the actions of their customers, a leaked discussion paper has revealed.

The Online Copyright Infringement Discussion Paper proposes a number of measures to combat piracy in Australia "in the interests of all" -- including rights holders, ISPs and consumers.

The news comes as the industry speculates just what the official Government response to piracy will be, with both rights holders and ISPs arguing over who bears the ultimate responsibility, and the Attorney General's department refusing to rule out a 'three strikes' response to piracy.

One recommendation is to block offending websites -- that is, the paper proposes amendments to the Copyright Act that would require ISPs (under court order) to block overseas websites used by Australians to access pirated content.

This step would "enable rights holders to apply to a court for an order against ISPs to block access to an internet site operated outside Australia, the dominant purpose of which is to infringe copyright" according to the paper.

Rights holders would need to meet "any reasonable costs" arising out of the court orders, while the onus would also be on rights holders to prove that the main purpose of offending websites was to infringe copyright. The sites would be blocked at the wholesale ISP level, meaning users would no longer be able to access the banned site, regardless of whether they switch ISPs.

The paper also proposes that ISPs should be held more responsible if their users download pirated content, citing a 2012 High Court case that found iiNet was not culpable for such actions of its users.

"The Government believes that even where an ISP does not have a direct power to prevent a person from doing a particular infringing act, there still may be reasonable steps that can be taken by the ISP to discourage or reduce online copyright infringement," the paper read.

As such, it is proposing to extend 'authorisation liability' to legally codify that "the absence of a direct power to prevent a particular infringement would not, of itself, preclude a person from taking reasonable steps to prevent or avoid an infringing act".

Such a move could potentially overturn the 2012 ruling of the High Court, leaving ISPs to more closely monitor the actions of their users.

The Government argues that it "would not expect any industry scheme or commercial arrangement to impose...any measures that would interrupt a subscriber's internet access" and that such a scheme should not "give industry participants a competitive advantage or disadvantage or impose unreasonable costs".

Update July 30, 2014, at 2:53 p.m. AEST: The Attorney General's Department has now officially released the discussion paper, co-signed by Attorney General George Brandis and Minister for Communications Malcolm Turnbull, which can be read in full here.

The paper will be open for submissions until September 1, 2014 (not August 25 as was originally published in the leaked copy of the document).